European Stocks Seen Slightly Higher; Portugal in Focus
European stocks were expected to edge higher on Wednesday after a mixed close on Tuesday and following the decision by credit rating agency Moody's to downgrade Portugal's credit rating to junk status.
The FTSE looks set to climb 14 to 16 points, or as much as 0.3 percent, according to financial bookmakers, Germany’s DAX is predicted to be up by 14 points to 7453 and the CAC 40 in France is called nine points higher at 3988.
London’s FTSE closed up 6.49 points on Tuesday to 6024.03, the DAX was down 3.52 points to 7439.44 and France’s CAC 40 ended down by 24.28 points to 3978.83.
In Asia on Wednesday stocks had a weak start after the Portuguese downgrade and as investors eased off following last week's rally in risky assets.
Stocks finished mixed in low-volume trading in the US on Tuesday, with the Dow and S&P breaking a five-day winning streak.
Investors largely shrugged off Moody's downgrade of Portugal, looking to key employment news expected Wednesday and later this week.
The euro suffered against the dollar and the Swiss franc in Asia on Wednesday after the Moody's downgrade of Portugal, a move which reignited fears about the extent of the sovereign debt crisis in the periphery of the euro zone after a period of relative calm following confirmation that Greece would secure a new tranche of emergency loans.
The single currency fell to a low of 1.2093 Swiss francs from above 1.2200 on news of the downgrade of Portugal by four notches to Ba2.
Against the dollar, the euro fell to a low around $1.4395 before recovering a bit of ground to $1.4456.
The German cabinet will meet in Berlin on Wednesday to decide on the draft budget for 2012 and financial planning until 2015.
Finance Minister Wolfgang Schaeuble is expected to give a press conference at 12:15 London time.
The ECB Economic Conference on emerging Europe 'From crisis to recovery: old and new challenges in emerging Europe' will continue in Frankfurt on Wednesday and the ESMT Annual Forum in Berlin is expected to attended by Allianz CEO Michael Diekmann and Deutsche Bank chief Josef Ackermann.
The euro zone's biggest banks will meet in Paris again on Wednesday to discuss terms of investors' participation in the restructuring of Greek debt, one day after the Moody's decision to downgrade Portugal.
New IMF Managing Director Christine Lagarde will give a press conference in Washington on Wednesday at 12:30 London time.
Economic data out on Wednesday includes Spanish industrial production data for May, expected at 8:00 London time.
German manufacturing orders for May will be released at 11:00 and the Ifo euro zone economic outlook will be available from 3:00 pm UK time.
Corporate releases for Wednesday include Air Berlin traffic numbers for June and UK low cost airline Easyjet will also release recent traffic data.